The Truth Behind C-Store Revenues

While many people believe that convenience stores and gas stations make most of their money at the pumps, that is actually far from the truth. In reality, the food and beverage sales inside the store are the most critical part of any convenience store's bottom line, making it essential to get customers inside the store. Once they're inside, the merchandising of items becomes vital.

Why In-Store Sales are Critical to Profits

While gas stations and convenience stores may have a sign with the logo of a major oil company such as Exxon or Chevron, the majority of these businesses are independently owned and operated. The owner may be a franchisee of the company and pay a royalty for the use of the name, or be an independent operator and purchase fuel on the open market. Nearly 60 percent of these owners, whether a franchisee or independent operator, own and operate a single store.

The average convenience store or gas station makes only pennies from the sale of a gallon of gasoline. After accounting for overhead and expenses associated with the sale, it's not unusual for a business to make a profit of about five to seven cents per gallon.

Not only is the profit margin on gas sales low, but the competition for these dollars is fierce. While there are consumers loyal to certain fuel brands, the majority make their buying decision based on price. This forces owners to keep prices low to increase traffic, especially in busy locations where customers have several options in a small area.

Convenience store and gas station owners have an incentive to keep gas prices low to stay competitive and maintain a flow of customers. The low-profit margins associated with gas make it critical to get customers in the door to improve profits.

Grab and Go Merchandising

According to a National Association of Convenience Stores study, about 44 percent of gas station customers enter the store. In addition to fuel price, the study also found that employees and the quality of food influence which gas station a consumer visits.

Data shows that with nearly half of all fuel customers walking in the store, almost a third purchase a snack or drink. While snacks, drinks, and other items bring in only a third of the average gas station's revenue, these items have profit margins that can be 50 percent or more and account for nearly 70 percent of all profits. Research shows that an eye-catching display makes it more likely for a consumer to make an impulse decision to buy a product.

Grab-and-go food cases offer a growing opportunity for owners to increase sales by catching a customer's eye with something tasty to buy. More consumers than ever are looking to limit person-to-person contact, creating an opportunity to expand on traditional convenience store offerings. With over 22 percent of food sales coming from grab-and-go offerings, operators are finding increased profits from adding healthy food options such as fruit and hot meal items to their already profitable beverage and sandwich sales.

Grab-and-go cases are a simple way to take advantage of the upward trend in grab-and-go purchases. In addition, multiple merchandising cases placed at strategic locations in the store can help offer consumers increased options and fuel profits.

The brand new Federal Industries Vision Series is a high-profile case complete with added visibility. The enhanced visibility from the front and side perspectives allows for more engagement, more appeal, and increased return on investment. This means putting the profit in front of the guest's face, when they're most likely to impulsively purchase - especially those healthier options compared to pre-processed foods. The see-through sides allow a stylish look, while also being practical and appealing. The Vision Series comes in a variety of sizes and configurations. From width and height, to heated, refrigerated, and non-refrigerated, versatility and durability are important and are both key factors to c-store operators. 

Contact an Expert

As gas prices rise and the demand for fuel increases, it's easy to assume that convenience stores and gas stations create immense profits. While it's true that gas provides consistent sales, the payoff is small, and it's vital to improve inside sales to increase profitability.

We specialize in providing foodservice and beverage equipment to help our clients stay competitive and improve profits. To see our newer products of 2021, please click the image below and connect with a team member today.